Imagine your house is on fire. In the front of the house, you have a fire department working tirelessly to put out the fire with water. In the back, someone is spraying your house with gasoline.*
Such is the current state of U.S. anti-corruption enforcement. The United States has vigorously enforced the FCPA against individuals and companies that bribe foreign government officials. Yet the vast majority of the foreign officials who demand these bribes continue to act with impunity.
In a perfect world, countries would enforce existing anti-corruption laws against their own, corrupt officials. But although the United States helps many countries increase their domestic enforcement capacities, this “solution” is unlikely to effectively increase enforcement for the reasons Tom Firestone and Maria Piontkovska explained in their recent article:
Foreign officials who take bribes often share a portion of their illegal proceeds with their superiors, and bribe-taking officials frequently threaten to expose the higher-ups with whom they shared if they are not protected. Even without such a blackmail threat, serious independent investigation and prosecution of such a crime may expose corruption at high levels. Therefore, it is not surprising that FCPA prosecutions so rarely involve corresponding “demand-side” prosecutions of the bribe-takers.
Even when demand-side enforcement actions take place, the officials are rarely sanctioned. A 2018 OECD report found that public officials were “known to have been sanctioned in only one fifth of the 55 schemes covered by the [OECD] survey.”
Some prosecutors in the United States have attempted to fill this enforcement void by employing a patchwork of statutes — like the Travel Act, mail/wire fraud, and money laundering statutes — that enable demand-side prosecutions of foreign officials. Unfortunately, their use has been infrequent.
In light of these limitations, U.S. legislators recently introduced a law aimed directly at the demand side of transnational bribery schemes. The Foreign Extortion Prevention Act (FEPA) targets foreign officials who demand or accept bribes in return for fulfilling, neglecting, or violating their official duties. Like most legislative proposals, FEPA would solve many problems and create a few new ones.
First, any attempt to combat the demand side of bribery is a very welcome development. If passed and aggressively enforced, FEPA would address a long-standing complaint by the individuals and companies that often face prosecution while the foreign officials remain untouchable. This should be applauded.
As one of the bill’s co-sponsors, Rep. John Curtis (R-UT), has explained: “Currently, a business being extorted for a bribe can only say ‘I can’t pay you a bribe because it is illegal and I might get arrested…. [t]his long-overdue bill would enable them to add, ‘and so will you.’”
FEPA would also align the United States with other countries — such as the United Kingdom, France, the Netherlands, and Switzerland — which have laws in place to prosecute corrupt foreign officials. Moreover, it is consistent with anti-bribery conventions, such as the UNCAC, which encourage parties to address both the demand and supply sides of bribery schemes in implementing legislation (the OECD has similarly called for the prosecution of both sides of bribery transactions).
Critics may argue that the corrupt foreign officials are unlikely to be extradited. But as Firestone and Piontkovska point out, “even if the bribe-takers are never extradited or prosecuted, a U.S. indictment would make it difficult for them to travel (lest they travel to a country that has an extradition treaty with the United States) and to spend their ill-gotten gains…[and] the fact of an indictment could be used to support other penalties, such as sanctions under the Global Magnitsky Act (GMA).”
The legislation is not without its flaws. By placing the FEPA prohibitions under 18 U.S.C. § 201 — widely considered the centerpiece of U.S. domestic anti-bribery legislation — foreign officials now face a different standard of liability than the companies or individuals who fall within the purview of the FCPA. There is no compelling reason for this different standard, and creating one adds an unnecessary hurdle for prosecutors.
FEPA also fails to include critical provisions found in the FCPA, such as the affirmative defenses (local law and reasonable/bona fide expenditure) and the grease payment exception. This subjects bribe recipients to a far more stringent standard of liability than bribe payers.
Although it is not a perfect means to address demand-side bribery, FEPA is a positive step forward for U.S. anti-corruption enforcement. Unfortunately, it is unlikely to become law due to the current political climate. This is a particularly disappointing reality given the flurry of anticorruption-related legislation proposed in recent months (e.g. the CROOK Act and the Kleptocrat Exposure Act). Nevertheless, we should applaud this latest attempt to combat transnational corruption.
*Thank you to Edward Davis, who provided this analogy at an anti-bribery conference I hosted at GW Law several years ago.